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tv   On the Money With Maria Bartiromo  NBC  June 9, 2013 4:00pm-4:31pm PDT

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hi, everybody, welcome to "on the money." i'm maria bartiromo. the market's on edge. worries about the economy and the fed. now some big new data is out. what does the jobs report mean for your portfolio? plus, taste of success. where america's economy is booming, why, and the search for prosperity. my conversation with controversial analyst meredith whitney. >> we are america's emerging market. >> and a marketing maven on the secrets of making videos go viral, from a cereal ad to homemade music videos. the message, the media and millions at stake. "on the money" begins right now. >> this is america's number one financial news program, "on the money." now maria bartiromo. >> here is a look at what is making news as we head into a new week "on the money." the much anticipated may jobs report came in slightly better than expected.
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the economy created 175,000 new jobs led by the retail services sector. but the unemployment rate rose slightly to 7.6%. economists are saying that may actually be a good sign because more people are entering the labor force as the economy strengthens. job creation for the previous two months, however, was revised downward by about 12,000. well, it was a wild week on wall street, the dow avoiding its first three-day losing streak on thursday on a huge late-day rebound, erasing a triple-digit loss to finish in the black. the markets continued up on friday and the jobs numbers. a sign of strength in america's economy. may auto sales show ford with an increase of 14%. gm up 3%. chrysler rose 11%. and toyota up 2 1/2%. the industry on track to sell more than 15 million vehicles this year for the first time since 2007. dora the explorer and spongebob squarepants have a new online home. the animated kids series will be
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moving to from netflix, part of a new licensing deal. it's been a week of nervous markets for sure. anticipation of what will happen next with the economy. now the big number everybody has been waiting for. the jobs report is out. joining us right now to talk about what it means, karen finerman, president of metropolitan capital, and author of the new book "finerman's rules." also with us diane swonk, chief economist with mesirow capital. ladies, good to see you. thanks for joining us. >> thanks for having me. >> good to be here. >> diane, first the jobs numbers out friday. the economy creating 175,000 jobs for the month that was slightly better than expected, right? even though the unemployment rate is up slightly to 7.6%. >> it was better than expected, although, of course, the month of april was revised down. what we have seen is the broader economy is that job growth has gone from about 207,000 a month for the six months ending at the fourth quarter and beginning of the year to now in the second quarter about 150,000, a little north of that. and that's well below what the fed considers sort of a healthy threshold.
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so that's important that we've seen a moderation in growth. also, the composition job gains still really heavily concentrated in the part-time sector, low-wage jobs, the retail sector. and we saw really no increase in average hourly earnings. >> so the quality is not really where you want it. karen, what is your thought here? what does the jobs report tell us about investing in the markets and economy today? >> well, i like that it was sort of in the middle of the fairway. we're wondering if it's good news/bad news or vice versa. and i also am thinking we're long-focused fund. and one of the things that is helpful is the lack of correlation that we saw a year or two ago. as fundamental started to evolve and companies earnings were what mattered, the market has a nice run now. now i'm actually a little bit nervous that we're starting to see some of these macro events that are very scary. japan may be somewhat -- well, the volatility is gigantic. is it out of control? i don't know. but that actually makes me a little bit nervous, combined with the idea of, all right,
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maybe the fed at some point will start tapering, and we got just a hint of what that might look like, which is also scary. that actually makes me a little less optimistic. >> so you want to be taking money out of stocks, then? >> i want to be buying protection. i'm still long, but i'm spending money on protection. >> diane, diane, what about you? what do you think in terms of the federal reserve? we had the fed releasing the beige book, the regional survey of the u.s. economy. they added the word "modest" to moderate growth. we all know everyone focuses on what the fed said. they added modest to moderate. what does that tell you in terms of when the fed may start the winding down of the stimulus, and does that impact the markets? >> well, this is really important, because i think it's been really overblown in the marketplace. what we've seen is the fed is considering maybe as early as september in tapering. i think actually if we do see some of the headwinds from the sequester continue the seep in the data which we started to see the bulk of the cuts are over the summer before the end of fiscal year 2013, and they're
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going to continue likely into 2014. that could really dampen the overall economic situation. and as the fed tapers, they'll still continue to add. and i think you have to really think of it as a calibration. when qe2 came out, it was 600 billion. by the end of june, we're going to exceed that in qe3, and we very likely could see the fed, even though it tapers, continues to buy for some time to come because of the sort of mediocre growth we're seeing out there. >> nonetheless, the tapering is going to happen at some point in terms of buying lower numbers of bonds, you know, a smaller stimulus does that impact the stock market? is that still even though it's not -- the fed is out of the way 100%, does that send the stock market into a sell-off? >> i don't know if it sends it into a sell-off or not, but i do think the real concern here is the competition between monetary stimulus and fiscal drag. you know, we like in an ultimate ideal world for them to be complimentary, both fiscal stimulus and monetary stimulus at the same time.
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the fact that they're competing with each other i think is part of the reason we're seeing some of the volatility out there as well. >> it feels like the conversation has changed. has the sentiments and the momentum shifted? are we now looking at a market that is going to be, you know, stable to down as opposed to hitting new highs? >> yes. i think so. but i still think there is value, and that's what we search for. but i think that -- you know, it used to be don't fight the fed. you always hear don't fight the fed. well, now the fed at some point will start to have, you know, a different tone. >> karen, let me switch gears to your book. in your book, you say women themselves are the biggest obstacles that we face. what do you mean by that? >> a few different ways. i think often women are uncomfortable with the idea of being ambitious, and i think women often are not their own best champion. and one of the things that actually relates to investing that i think is really interesting about women was a conversation i had with a male
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hedge fund manager. i said why don't you have any women analysts on your team. and he said, you know, i have a limited amount of capital. and when a guy comes in, he tells me how much we can make on a story, on an investment idea. and when the woman comes in, she talks about all the things that could go wrong and all the risks. look, have i this limited amount of capital to deploy. i fall for the upside every time. and i thought that -- and as soon as he said it, i realize i know what he is talking about. women do present things that way. my team is mostly women. so i'm used to that sort of style. but i think sometimes women being risk averse sometimes don't put themselves out there enough. they don't take enough risks. so if you're in the investment management business, the way you sort of move up is by getting investment ideas on the sheets and having them work. if you don't get them on the sheets, you can't move forward. >> ladies, thank you very much. great conversation. we appreciate it. karen finerman and diane swonk joining us. up next "on the money," are
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investors still hoarding cash in spite of a stronger economy? and what two banks told me about risk aversion, how it shapes the state and size of the world's largest financial institutions. and the analyst who made the call on the banking crisis mas . meredith whitney joins us. i wasn't looking to make my career on doom and gloom.
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welcome back. in spite of the recent record highs for the u.s. equity market, many investors remain risk-averse, keeping their cash out of the market, just sitting on cash. the ceo of the world's second largest private bank told me this week sergio armati head of usb is the latest in a string of
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ceos to describe a very high level of caution. >> remains absolutely -- i will describe it almost paralyzed. very high level of cash balances. and this has been the case for the last seven quarters. >> it's been a long time where people, even though we're seeing this market hit record after record, they're still nervous and they're sitting on cash. >> the higher it goes, the more nervous people get and frustrated. and not being in the market. >> armati also cited the need for a long-term solution to the federal reserve's exit from quantitative easing. >> a potential move of the fed in the future, how would that impact the economy. so how sustainable is the recovery that we have seen in the last few quarters. that's going to be the test that investors will want to see thinking contrasted with the more optimistic view of another ceo i spoke with, deutsche bank. >> we are calling for higher u.s. growth than many of our peers. and as consequence we're also calling for an end to the bond
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buying program happening maybe as soon as the end of 2013, latest first quarter 2014. >> yet jayne cautioned increased regulation has been a game changer for the financial services industry. >> there is no doubt that virtually every aspect of our business model, our capital models, business practices are being scrutinized and are the subject of regulation. i'm more concerned about the potential of regulation than the quantum of regulation. let's be fair. 2008 was a very, very difficult time for the entire world, not just for financial services. and the need for regulatory reform cannot be debated. so for me really basel goes a long way to addressing capital liquidity, so on and so forth. i would really say a unified approach would be the one which would best serve all parties. >> a unified approach, but you can't really have a global standard, can you? you can't have one standard across the world for the world's major financial institutions? >> why not?
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>> okay, okay. here in the u.s. it wasn't just consumers and banks who binged on debt, but state and local governments as well, says banking analyst meredith whitney. whitney's latest warning says those fiscal sins are transforming the u.s. economy, state by state. i spoke to the woman known for making bold calls. >> i care about the numbers being right. and then it's the numbers that give me the confidence to make these calls. it's just clear math. >> meredith whitney's 2007 prediction that the mortgage meltdown spelled disaster for the banking industry made her one of wall street's most watched analysts. she is doing the math again, this time describing a significant redistribution of american prosperity in her new book "the fate of the states." . >> your name, meredith whitney, became synonymous with doom and gloom. what was that like? >> so i have never looked for the worst in situations. that was a moment in time where, really, the music stopped, just a miserable moment of time in officials. and the cards were laid out, and i called it as i saw it.
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i wasn't looking to make my career on doom and gloom. up to that point i had made my career finding growth opportunities. and that's much more interesting. >> why did you write this book? >> i thought it was important for everybody, all americans to understand what is at stake here with local finances. it matters at home, because it matters to people who are reliant on the local education systems, the local public safety. so much within the system that is sacrificed when budgets are out of whack. >> you break down the fiscal challenges throughout the united states. we are america's emerging market as you write. >> when so many people talk about emerging market growth, they're talk about high single digit teens type growth compared to the u.s. gdp now is 2%. but it's as much as 3, 4%. so when you look at other parts of the world, you say it's so exciting, this emerging markets growth. we have it at home. you look at texas, louisiana, north dakota, all the way up to the central corridor, you see high single digits and double-digits growth inside of
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the united states. who would have thought we'd have so much prosperity, so much opportunity at home. >> so what is the methodology that you're looking at? is it unemployment? is it commodities? what really is the methodology behind this? >> every 50, 60 years or so, the map of the u.s. changes in terms of where the economic prosperity. you look at the manufacturing economy with the rust belt. you look at the housing economy with the sunbelt. and right now you're getting into a different type of economy that is really going to be fueled by, no pun intended, by cheap energy. the average debt per capita in california is twice that of the average debt per capita in texas. not only that, but the unemployment rate in texas is dramatically lower than that in california. they're employed. they have more money and less indebted so they're spending faster. so it shouldn't be surprise that in this central corridor, the rate of spending growth is growing 30% faster than that of the coast. >> whitney's thought locally
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before. on "60 minutes" in 2010, she predicted defaults of local governments totalling hundreds of,000s of dollars. it sparked fear in the muni bond market made up significantly of individual investors. do you regret being so specific? >> i don't think i was specific at all. so i tried to size the -- what i thought the impact would be. and i said hundreds of billions. i absolutely gave no timetable around that. my intent was never to scare people, but to raise attention to issues that are so important to americans. a taxpayer shouldn't be, you know, cuffed is usually subordinate to a pensioner or a bondholder. but effectively, the taxpayer is because the taxpayer is the one who ends up getting less services and paying more. i don't quite get why a bond payment is more important than a child's education. but that's the way the system exists. >> so what is the status of the states today, then?
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do you till think those states that are burdened by debt will see a heavy amount of default? >> i think that this is a long-term problem that needs to be addressed. and i hope it's addressed sooner than crisis comes. but there has been a lot of talk about state revenues improving, particularly california. state revenues always improve after you raise tax. but that's a one-time event. >> how do you feel about the economy and the markets today? >> the u.s. economy is misleading at 2 and plus percent, because you have sections of the economy that are growing, high single digit, low double-digit levels. and parts of the economy, california is struggling so deeply. so it's really a tale of two economies. >> my thanks to meredith whitney. up next "on the money," a new cheerios ad sparking major controversy online. we'll take a look at just what makes viral video contagious, and what it means for the
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from the harlem shake to cheerios ad controversy, viral videos spread faster in a new york minute and quickly become the day's buzz. so how can businesses jump in on the action and profit from going viral? joining me now, jonah berger, author of "contagious: why things catch on," and marketing professor at university of pennsylvania's the wharton school. good to see you, jonah. thank you so much for joining us. >> thanks for having me. >> it's a great topic.
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why do you see videos like this cheerios ad or the jcpenney t teapot. why do they go viral while millions of others don't. what is the secret? >> it's not luck and it's not chance, although it might seem that way. those two have a lot of controversy. whether it's jcpenney teapot looks a little like hitler if you squint the right way, or saying cheerios, interracial marriages. some people still in america think that's a problem, apparently. and so some people agree, some people disagree, and they fight about it, and that gives it a reason to be shared. >> so do you think people do these viral ads on purpose? they want to tap into the social media? they want a social response? >> i think many company news are trying to make videos that go viral. some do a better job than others. i don't think in this case either jcpenney or cheerios was trying to get this much attention. definitely jcpenney wasn't thinking that with the teapot. but it's become almost a tempest in a teapot if you will. >> really interesting. has there been a bad viral video or a story that actually severely hurt a company, either in terms of its stock price, in
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terms of its sales, its reputation? what can be done if that snaps. >> oh, there have been a number. you might remember a few years ago domino's pizza got in big trouble with some of their employees were filmed putting cheese up their nose and sneezing on a sandwich. and it got online. it got millions of views. people were disgusted. no one wanted to go to domino's. and dominos had to come out with something based on it. same as united breaks guitars. this guy flew on united airlines. they broke his guitar, he is a musician. he releases a video, gets hundreds of views. unite share price drops $180 million based in part on the viral views. companies are really aware that the share asking have a big impact on their bottom line. >> it's amazing. what can a business do to get their videos and products out there, get a better chance of going viral, but in a positive way? >> definitely good question. so, you know, there are a number of key scientific drivers of sharing. people share things that make them look good, for example. something that makes us look smart and in the know or special
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like an insider, we're going to tell everyone else. or take videos like rebecca black's friday is really popular. people view that video more on friday. big spike in attention on that day of the week because it reminds them that video exists. it's not luck. it's not chance. >> how important it is? what -- for a person's business, what does going viral mean for the bottom line? >> actually, if you look at the research, it shows that word of mouth is ten times as effective as traditional advertising. we don't listen to ads anymore. we know they're trying to sell us something. so we're not going to pay attention. but we will pay attention to our friends because we know they have our best interests at heart. if companies can figure out how to use that. >> what are your predictions in terms of what is going to be popular this summer? >> it's hard to have a crystal ball, but you see things trending. you look at cars. tesla is an exciting brand that has come out with an electric roadst roadster. high end, not cheap. folks are excited by this new brand and show off that status.
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>> i took a test drive of the tess lab, and it's spectacular. >> you did? >> i don't think i would have initially gone for it to buy this car, but once you're behind the wheel, you see what a tight ride it is, and no gasoline, it's amazing. >> and it also feels neat to have a car that not everyone else has. you're not just another bmw or mercedes driver. you have something a little different. >> it's special. >> jonah, great to have you on the program. >> thanks for having me. >> thank you so much. jonah berger joining us. appreciate that up next, a look at the news this week that will have an impact on the money. and news for sports fans. how the paychecks of your favorite athletes measure up. who is going straight from the field to the bank, you ask? we'll tell you. stay with us.
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for more on our show and our guests, check out the website first, here is a look at the stories in the week ahead that may move the markets and impact your money this week. on monday the senate will debate the immigration reform bill which would offer a path to citizenship for 11 million undocumented immigrants. on wednesday, the treasury department will release a monthly account of the surplus or deficit of the federal government. and on thursday, the retail sales report will be out, giving us a window into the consumer activity. and on friday, the producer price index will be reported, as well as industrial production. also on friday, by the way, the irs will shut down for the day. due to the sequester. and what superstar athlete has the biggest take-home pay? forbes released its annual list of the highest paid sports personalities this week.
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golfer tiger woods back on top. a title he held from 2001 until falling out of first last year. woods made more than $78 million in 2012, including $65 million in endorsements alone. rounding out the top five, roger federer, kobe bryant, lebron james, and top earning football player drew brees, all among the top earners. that will do it for us today. thank you so much for joining me. each week keep it right here where we are "on the money." have a great rest of the weekend, and i'll see you [ wind howling ] [ female announcer ] it balances you... [ water crashing ] fills you with energy... and it gives you what you are looking for
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>> this is "the chris matthews show." >> ask not what your country can do for you. >> tear down this wall. >> i can hear you. >> the time for change has come! chris: tomorrow, it's still barack obama's time, but democrats and republicans are focusing on hillary clinton in 2016. many of us, especially women my age, find it hard to think of what it would be like to have a woman, not as first lady, but as head of state, chief executive, and yes, commander in chief. already hillary's time as secretary of sit is given a hard look as legions of men and women say it's her turn. did we do it right? let's look back how we called hillary's last run for president. were we


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